Brown Bubbly Economy

Posted on November 28, 2011

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From brewery manufacturing to agricultural production, craft breweries are growing and providing jobs at a much needed time in our country. They are a small glass of bubbly economic growth. From higher labor inputs to skilled training and agricultural inputs to innovation, craft beer is spurring growth.

At the center of the brewery industry is the actual brewery, where the average craft brewery has a higher demand for people than larger industrial brewing. The average craft brewery produces 667 to 2,000 barrels per employee a year, whereas a larger brewer like Anheuser-Busch, for example, produces 5,169 barrels per employee a year 1 2. Higher production per employee is the standard objective in manufacturing; however, at most craft breweries, they pride themselves in promoting quality over labor productivity, efficiency is valued but they appreciate the ceiling on growth when it comes to craft quality. (Quality here being defined by the uniqueness of the product, large brewers like Anheuser-Busch are rightfully known as leaders in product quality for consistency.)

Breweries of all sizes are renowned for their innovations, from manufacturing to advertising. What makes craft breweries unique is their frequent need for innovation. With limited resources craft breweries have to be innovative to survive, whether this is gypsy brewing or extreme seasonal brews to draw attention. Witnessing the innovation being made in the brewing industry, especially in the area of sustainable practices, is a very powerful motivator and reminder of the ingenuity that exists in our economy.

Additionally, craft brewers are an important part of the agricultural industry. They usually have higher agricultural inputs by volume as their beers are “bigger” in flavor, using more hops, barley, and additional ingredients. Many craft brewers are also often on the forefront on local consumption and are creating the demand for locally produced inputs. In the UK a new initiative, Grain to Glass, was created to highlight “the huge importance of the beer supply chain to Britain’s rural economy” 3. And in New York State there has been recent growth in hop farmers 4.  On the other end of the beer life cycle, craft beer knowledge and experience is a unique differentiator by which servers and sellers of beer are able to enhance their professional desirability, see the Cicerone beer certification program.

Aside from higher employment per production to increased agricultural inputs, craft beer employs more people while not increasing the amount of beer consumed. Promoting the production and consumption of craft beer is not the same as promoting an increase in the total volume of alcohol consumption. The craft beer industry is on the rise while the overall beer industry is on a decline; in 2010 the overall beer industry was down 1% by volume while the craft beer industry was up 11% by volume 5. At 4.9% of the total beer industry, by volume, the craft beer industry can expand greatly into the overall beer market without increasing alcohol consumption in our country 5.

While beer is not the solution to the current economic environment, growth of the craft beer industry is a tasty prospect for the economy and palates.

1 Lueders Consulting’s Industry Standard’s data sheet http://www.brewconsult.com/lscstndr.html
2 Wikinvest page on Anheuser-Busch Companies http://www.wikinvest.com/stock/Anheuser-Busch_Companies_(BUD)
3 British Beer & Pub Associationhttp://www.beerandpub.com/newsList_detail.aspx?newsId=458
4 The New York Times “Hop Farmers Reviving Heady Days of Brewing” by Daniel Fromson http://www.nytimes.com/2011/11/09/dining/hop-farmers-reviving-brewing-in-new-york-state.html?scp=2&sq=hops&st=cse
5 The Brewers Association’s Fact Sheet http://www.brewersassociation.org/pages/business-tools/craft-brewing-statistics/facts

Notes
The terminology for small, craft, micro beer has been debated elsewhere, and will likely continue to be an issue of debate. For reasons of consistency, I have used the term “craft.” Please see the Brewers Association for definitions on each category, a commonly accepted reference in the United States: http://www.brewersassociation.org/pages/business-tools/craft-brewing-statistics/craft-brewer-defined
Gypsy brewing is when a brew will use excess capacity at another brewery for their production, often cycling between different locations. One example is the Pretty Things Brewery.
Beer industry comparisons were done in volume, craft beer is frequently more expensive so it represents a higher share of the industry compared to volume. Again, see the Brewers Association for more details http://www.brewersassociation.org/pages/business-tools/craft-brewing-statistics/facts

Content: There is so much packed into this post I hope to explore each area further in its own right.

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Posted in: Beer Industry